What is pejotizacao and is it legal in Brazil?

Pejotizacao is the practice of hiring an individual through their own legal entity (PJ, pessoa juridica) rather than as an employee. Contracting a legal entity to provide services is lawful in itself and is regulated by Article 593 of the Civil Code. What the law rejects is using a civil or PJ contract to disguise a real employment relationship, which can trigger Article 9 of the CLT and lead to recognition of employment. Because this area has been under review by the Supreme Federal Court, the current case law should be checked before relying on an aggressive PJ structure.

When is a Brazilian service contract reclassified as employment?

Brazilian law looks at the facts, not the label. An employment relationship is recognised where four features are present together: subordination (working under the client's direction), habituality (regular, ongoing work), personal service by the specific individual, and payment. If a contract described as a service agreement actually shows these features, a labour court can declare it void as a disguise and recognise employment under the CLT, bringing employee rights and charges. A clear independence clause helps but cannot override how the relationship really operates.

Are penalty clauses limited in Brazilian service contracts?

Yes. A penalty clause (clausula penal) is allowed, but Article 412 of the Civil Code caps the penalty at the value of the main obligation, so it cannot exceed that value. In addition, Article 413 allows a court to reduce the penalty where the obligation has been partly performed or where the penalty is manifestly excessive. Because a service contract does not always have a clearly defined main obligation value, setting a realistic and clearly anchored penalty is important so that the clause holds up if it is ever enforced.

Does the LGPD apply to Brazilian service agreements?

It can. Where the services involve processing personal data, the General Data Protection Law (Lei Geral de Protecao de Dados, the LGPD) applies, and the contract should set out the roles, purposes and safeguards for that data alongside the ordinary confidentiality clause. Many service relationships, such as IT, marketing or payroll services, touch personal data, so the data terms should not be an afterthought. Aligning the confidentiality and data-protection terms with the LGPD reduces the risk of a compliance gap between the parties.

contracts

Service agreement in Brazil: Template, Key Clauses and Local Law (2026)

Adira EditorialLegal AI desk12 October 20266 min read

What a service agreement in Brazil is, and the law behind it A service agreement in Brazil (contrato de prestacao de servicos) is a civil contract governed by the Civil Code (Codigo Civil, Law 10.406/2002), Articles 593 to 609. It is a residual category: by Article 593, these civil rules apply to a service that is not governed by labour law or a special statute. The contract can be made by an individual or a legal entity, and it is widely used for independent professionals and for business-to-business services. The central issue is the line between a civil service contract and an employment relationship under the Consolidation of Labour Laws (CLT). Brazilian law looks at the facts, not the label. An employment relationship exists where there is subordination, regularity (habituality), personal service by the individual and payment. Where those features are present, a contract dressed up as a service agreement can be recognised as employment under Article 9 of the CLT. The common practice of hiring an individual through their own company (known as pejotizacao, from PJ, pessoa juridica) is not illegal in itself, but it is unlawful when used to hide a real employment relationship. This area is also moving. The Supreme Federal Court (STF) has been examining the limits of civil and PJ contracting for services, so the current state of that case law should be checked before relying on an aggressive structure. This article is general guidance, not legal advice. Have a Brazilian lawyer review a service agreement before you rely on it. ## What Brazilian law requires in 2026 - Civil, not labour, when genuine. Articles 593 to 609 of the Civil Code govern a true service contract. The contract sets the scope, price, term and termination, within the limits of the Civil Code.

Substance decides classification. Subordination, habituality, personal service and payment point to employment under the CLT. If those are present, the arrangement can be reclassified as employment regardless of the contract's wording, bringing CLT rights and charges.
PJ contracting is lawful but watched. Contracting a legal entity to provide services is permitted, but using it to disguise employment is not. Keep the relationship genuinely independent in practice, and follow developments in the STF case law.
Tax and invoicing. A provider operating as a company issues invoices (nota fiscal) and bears its own taxes and social charges; service tax (ISS) and other levies may apply.
Termination and penalties. The parties agree term and termination. A penalty clause (clausula penal) is allowed but is capped by Article 412 of the Civil Code at the value of the main obligation, and a court can reduce it under Article 413 where the obligation is partly performed or the penalty is manifestly excessive.
Language. Portuguese is the practical standard for a contract to be used and enforced in Brazil. ## Brazilian service agreement template Copy the block below and fill the bracketed fields. Keep it in Portuguese for use in Brazil. ``` SERVICE AGREEMENT (CONTRATO DE PRESTACAO DE SERVICOS) Made on [DATE] BETWEEN: [CLIENT NAME], [CNPJ] ("Client") AND [PROVIDER NAME], [CNPJ or CPF] ("Provider") 1. SERVICES The Provider will provide the following services: [describe scope and deliverables], independently and without subordination. 2. TERM From [DATE] [to [DATE] / until completion]. [Renewal or notice to terminate: [terms].] 3. PRICE AND INVOICING The Client pays [amount] BRL [per deliverable / per month], against a nota fiscal, within [N] days. Taxes as applicable. 4. STATUS The Provider is independent, bears its own business risk, and sets how the services are performed. This is not an employment relationship. 5. INTELLECTUAL PROPERTY Rights in deliverables [transfer to the Client on full payment / are licensed as follows]. 6. CONFIDENTIALITY Each party keeps the other's information confidential, consistent with the LGPD for any personal data. 7. PENALTY A penalty (clausula penal) of [amount] applies for breach, not exceeding the value of the main obligation (Article 412 Civil Code). 8. TERMINATION Either party may terminate on [N] days notice, or for material breach. 9. GOVERNING LAW Brazilian law governs. The courts of [city] have jurisdiction. Signed: Client ____________ Provider ____________ Name / date Name / date

- **Services (clause 1).** Describe the scope and deliverables clearly, and avoid language that implies set hours, exclusivity or day-to-day direction, which point toward employment.
- **Penalty (clause 7).** A penalty clause is useful but capped at the value of the main obligation under Article 412, and reducible under Article 413, so set a realistic figure.
- **Confidentiality and LGPD (clause 6).** Where the services involve personal data, the General Data Protection Law (LGPD) applies, so align the confidentiality and data terms with it. ## Red flags to avoid - A service contract that in substance has subordination, habituality and personal service, which can be reclassified as employment with back charges.
- Using PJ contracting to disguise a real employment relationship.
- A penalty clause above the value of the main obligation, which Article 412 does not allow.
- Leaving intellectual property silent, so the client may not own what it paid for.
- Ignoring LGPD obligations where the services touch personal data.
- Relying on an aggressive structure without checking the current STF case law. ## Where a contract workspace helps A template gives you a workable Brazilian service agreement. The ongoing work is keeping the relationship genuinely independent rather than disguised employment, keeping a penalty within the Article 412 cap, settling IP and data terms, and tracking terms and renewal dates across many providers. Drafting or reviewing a service agreement, checking it against the Civil Code and the misclassification tests, editing a clause in plain language and tracking term and payment dates can sit in one AI contract workspace tuned to how your company buys services. [Adira](https://adiralaw.com) is built around that shape: it drafts from a template, models the contract as linked clauses so it can flag wording that points toward employment or a penalty above the legal cap, lets you edit by instruction, and keeps dates on one timeline. Adira is India-first today, and deeper Brazil-specific coverage is on its roadmap rather than a settled claim, so use it for drafting and review and keep a Brazilian lawyer for the local-law call. The template above is enough to start a fair agreement on its own. Last verified October 2026.

Frequently asked questions

What law governs a service agreement in Brazil?: A genuine service agreement (contrato de prestacao de servicos) is a civil contract governed by Articles 593 to 609 of the Civil Code (Law 10.406/2002). Article 593 makes these civil rules residual, applying to a service that is not governed by labour law or a special statute. The contract can be entered into by an individual or a legal entity and sets the scope, price, term and termination within the limits of the Civil Code. Where the relationship is actually employment, the Consolidation of Labour Laws (CLT) applies instead.
What is pejotizacao and is it legal in Brazil?: Pejotizacao is the practice of hiring an individual through their own legal entity (PJ, pessoa juridica) rather than as an employee. Contracting a legal entity to provide services is lawful in itself and is regulated by Article 593 of the Civil Code. What the law rejects is using a civil or PJ contract to disguise a real employment relationship, which can trigger Article 9 of the CLT and lead to recognition of employment. Because this area has been under review by the Supreme Federal Court, the current case law should be checked before relying on an aggressive PJ structure.
When is a Brazilian service contract reclassified as employment?: Brazilian law looks at the facts, not the label. An employment relationship is recognised where four features are present together: subordination (working under the client's direction), habituality (regular, ongoing work), personal service by the specific individual, and payment. If a contract described as a service agreement actually shows these features, a labour court can declare it void as a disguise and recognise employment under the CLT, bringing employee rights and charges. A clear independence clause helps but cannot override how the relationship really operates.
Are penalty clauses limited in Brazilian service contracts?: Yes. A penalty clause (clausula penal) is allowed, but Article 412 of the Civil Code caps the penalty at the value of the main obligation, so it cannot exceed that value. In addition, Article 413 allows a court to reduce the penalty where the obligation has been partly performed or where the penalty is manifestly excessive. Because a service contract does not always have a clearly defined main obligation value, setting a realistic and clearly anchored penalty is important so that the clause holds up if it is ever enforced.
Does the LGPD apply to Brazilian service agreements?: It can. Where the services involve processing personal data, the General Data Protection Law (Lei Geral de Protecao de Dados, the LGPD) applies, and the contract should set out the roles, purposes and safeguards for that data alongside the ordinary confidentiality clause. Many service relationships, such as IT, marketing or payroll services, touch personal data, so the data terms should not be an afterthought. Aligning the confidentiality and data-protection terms with the LGPD reduces the risk of a compliance gap between the parties.

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Service agreement in Brazil: Template, Key Clauses and Local Law (2026)

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